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Delta to Turn a Profit in Q2

I rarely report airline financials here, but I thought it was interesting to note that Delta announced yesterday that they expect to turn a profit in the 2nd quarter (ie, this quarter). I’m by no means suggesting that the situation isn’t gloomy (it is), but we should remember that it’s not impossible to be profitable either (Southwest and Allegiant).

Just to be clear, Delta’s not in good shape – they announced they’re further cutting capacity in the 4th quarter (from 10% to 13% – yikes).

And one further note (as if this isn’t a random enough post as it is), I saw that a US Airways exec said that so-called a la carte pricing (aka, fees for everything) could bring $300 million in additional revenue to the airline.  He also said that customers prefer to have everything unbundled.  Which would be true if the base fare were lowered (as Air Canada had done) and added on top of that.  That’s not what happened.  I don’t begrudge the airlines anything – they should charge whatever they want for everything.  The market will dictate whether it’s a good idea.  But where I think they’re making an error is in treating the new fees as if they’re in any way at all beneficial or that cutting back on frequent flyer benefits helps to make Dividend Miles “one of the best programs in the industry.”

It’s time to stop flinging the B.S. – every traveler knows that the industry is a mess because (at least in some part) of the fuel situation.  Travelers have the same issues when they drive.  I think if they were completely up front about it – we’re instituting these fees because we can’t raise fares – consumers would be fine.   Suggesting that consumers are benefiting from the changes is just silly.

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  1. A recent analysis done by the Business Travel Coalition gives a better perspective of the industry as a whole and how each airline ranks in terms of long term health. Delta may suffer, but is in absolute better shape than others, including over Continental.

    http://businesstravelcoalition.com/campaigns/consolidation/airline_crisis_report.pdf

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